Optimism #32
Dear clients and friends,Here in the Okanagan, it’s starting rain, smoke is clearing and life is getting back to normal.
My favourite month, September, is almost here.
Every time I see my nearly 86 year-old dad he tells me the stocks prices are too high and that there is a big drop coming. He seems to think they are like trees, which grow to a certain point and then rot and fall over.
I politely, kindly and gently tell him that I don’t know, but in general, I disagree. I tell him that growing share prices are a sign that capitalism in many ways (certainly not all), is working. Shares rise because of progress.
We chuckle about his house in Vancouver in the late 1960s. He and my mother paid $11,000 and sold for $13,000 about two years later. Made a killing.
Today its worth about 3.5 million. There is a lesson here somewhere.
Jeremy Siegel, a famous investor noted that during the Great Depression, share prices fell 80% but dividends only fell 20%.
Credit Suisse U.S. equity strategist Jonathan Golub, however, is singing a bullish tune.
In a Monday research report, Mr. Golub predicted the S&P would climb to 5000 in 2022, 563 points and 13 per cent higher than current levels. (Monday August 9th, Globe and Mail)
Monica Rizk- one of those technical chart types is optimistic about Fortis. Article this past Friday in the Globe.
https://www.theglobeandmail.com/investing/investment-ideas/article-bullish-on-fortis-inc/
The President of Fortis, David Hutchens apparently also likes it, and made the biggest insider purchase in the last 12 months. That single transaction was for CA$1.0m worth of shares at a price of CA$50.80 each.
Bullish insiders at Fortis Inc. (TSE:FTS) loaded up on CA$1.3m of stock earlier this year (yahoo.com)
Insider trading at CWB, Canadian Western Bank. Always a good sign. Director, Irfhan Rawji acquired $10,000 shares at a cost per share of 34.15, increasing his holdings to 19,175 shares.
Former President and CEO, Bruce Berry bought another 10,000 shares of Winpak, a Canadian company.
Good article recently published about the opportunity of moving to dividend stocks
https://financialpost.com/investing/canada-dividend-dynasties-stocks-frothy-markets
Ottawa bailed out Air Canada during the pandemic and received shares in the company at a discount which they plan to sell for a tidy profit of $177 million. Great stuff.
It’s quite far down within the link so I chose to just paste a summary. Here is a snippet:
Soaring profits: Ottawa will turn a tidy profit on its $5.9-billion aid package for Air Canada, the Parliamentary Budget Officer concludes in an analysis released last week.
Over 10 years, the government is projected to make $177-million from that assistance package, which gave Ottawa equity in Air Canada, as well as warrants to purchase
additional shares, along with extending several lines of credit to the airline. Gains from those assets, plus interest payments from Air Canada, will more than offset the
government’s borrowing costs. The PBO notes, however, that it’s unclear how long the government intends to hold on to its shares.
Interesting article about buying companies that own things that are nearly impossible to build more of. (until there is a crisis of course 😊)
Gordon Pape: The case for buying Canadian pipeline stocks - The Globe and Mail
Have a great week,